A few years ago, an article like this would start out by selling how important it is to make a significant investment in data. That approach is long gone as almost every company is collecting, studying, and attempting to leverage some sort of data. The focus has shifted to prioritizing the types of data to focus on and how to leverage Big Data and AI.
The fact is that data has sped past being important and parked on top of being essential. It’s an impossibly gigantic topic to tackle in a single article, so today we’re going to focus on customer data. It’s still amazing to me how many companies fail to collect, store, and leverage customer data. Too often this data is incomplete or disregarded due to the very real operational challenges associated with collecting and maintaining complete customer records. I get it, process changes are difficult and training team members to think beyond the sale takes effort, repetition, and monitoring.
The Obligatory Anecdote
Think about this scenario. You and your better half are hosting a dinner party for a group of 5 couples. Let’s say in this hypothetical scenario that these couples are partners in a brand-new business venture. You’re meeting most of them for the first time and know very little about them. There are seemingly infinite elements to consider. Are there any allergies or food preferences? Who drinks martinis, beer, or wine? Who doesn’t drink at all, and do you roll the dice on Coke or Coke Zero? How much business should you talk? Outside of business, what does everyone like to do? We’ve all been in these scenarios and had them go poorly, well, or somewhere in between.
Alternatively, let’s say you’re hosting a dinner party for your 5 favorite couples like you have countless times before. You’re crafting the menu with detailed knowledge about likes and dislikes that you can use as filters to narrow down the options for cuisine. You’re sure to have everyone’s beverage of choice at the door when they walk in, and you know who’s going to be early or late to the party. The conversation flows seamlessly as you catch up on the shows you all watch and the vacations you can’t wait to hear about (again, because you’ve already seen every detail Facebook). The point is it’s easy and you’re much more likely to be at ease with all the decisions you made ahead of the party.
The Aha Moment
In a nutshell, that’s what customer data does for you. It allows you to become familiar with your customers and how they behave, or transact, with your business. If collected, stored, and leveraged properly customer data can serve as the bridge between your product or service and sustained growth in revenue. By understanding how your customers are interacting with your business, you can easily recognize opportunities or challenges in your business to create better alignment in your operations and marketing campaigns. The best part about having customer data to leverage is that it’s yours. Like a fingerprint, no two companies have the exact same customer data. Even two businesses in the same vertical, located a block apart, will attract different types of customers and behaviors. Studying this data is like hiring the world’s greatest consultant in that you understand your business at the core as seen from the eyes of your customers while stripping away your personal bias.
There are countless ways that this information can be leveraged. Today we’ll focus on 5 strategies that can empower your marketing partners to launch more effective campaigns.
Strategy #1: Aggregate Your Customer Data as a Corporate-Level Process.
For businesses that are in multiple markets, or franchise brands with many locations, this is essential. Often, customer data is collected by multiple POS or CRM systems at work in each local market. Ideally, these POS or CRM systems would all be on the same platform to make data aggregation an easier process, however that’s not always the case. Regardless, investing the time and effort into building a process to regularly aggregate every record of customer data for your brand sets the foundation to be able to delve deeper into analysis that will fuel every aspect of your business.There are major benefits to taking data aggregation “in-house”.
First and foremost is control.
By aggregating data to the corporate level, you have every piece of relevant information at your fingertips to analyze your operators, markets, and marketing vendors. It doesn’t take a data scientist to run some simple queries on that data to produce immediately actionable insights. In cases where there is a universal POS or CRM, there is often built-in functionality to make it easier to do so without any standardization or formatting needed. Domino’s Pizza rolled out their proprietary Pulse POS system in 2001 in partnership with Breakaway. It was a process selling the value to each of their franchisees and onboarding all their stores, however today Domino’s Pizza is viewed as a technology company as much as a pizza delivery franchise. Corporate has access to every single order placed and is constantly studying trends to gain a competitive advantage.
Second is aggregated bargaining power.
By aggregating data to the corporate level, you can now negotiate with marketing partners on a grander scale. Regional and national campaigns are made simpler from the vendor since they will be receiving data from a single source. Campaign volume is also higher, driving down your CPM.
Finally, you gain the ability to create synergy in marketing.
We all know that marketing works best as a collection of channels and campaigns that work together, as opposed to channel-specific vendors attempting to prove that they have the “silver bullet” to gain wallet share. By aggregating data to the corporate level, you gain the ability to control the upfront analysis that drives each campaign on each channel. You become the conductor of your vendor orchestra. Information and trend analysis becomes holistic, and you can share insights with all your vendors to improve the performance across channels. That information is yours, not part of some black box vendor-specific value proposition.
Strategy #2: Commit to Analyses Beyond Just Fueling Marketing Campaigns.
Data is knowledge and knowledge is power. Once you have committed to aggregation of location-specific data to the corporate level, you have the power to look at things from a bird’s eye view. You can step back and think about the metrics that are important not just in your marketing, but in your business as a whole.
Are staffing challenges causing business to bottleneck at times, resulting in locations having to temporarily close their doors and upset their customers? Study the data and identify red flags, like employees-per-revenue-dollar, pending leads in the sales funnel, or delivery times. Set alerts to identify locations approaching those levels and focus your efforts on hiring initiatives in those markets.
Are you planning to grow your brand into new markets? Segment your current markets by market type, study the data, and figure out what type(s) of markets are showing the most success. Let that dictate which new territories you pursue.
Do you fully understand the makeup of your ideal customer? Many companies have built customer profiles with hypotheticals and conjecture. Use your customer data to truly identify your customer segments. A simple cluster analysis will almost always help you gain a deeper understanding.
None of the use cases above relate at all to launching channel-specific marketing campaigns. However, the more data you have at your fingertips, and the more you understand about your business, the more pointed you can be in your approach to establishing a fruitful relationship with a new or existing vendor. Each bit of insight pushes them one step closer to the finish line.
“Data is knowledge and knowledge is power. Once you have committed to aggregation of location-specific data to the corporate level, you have the power to look at things from a bird’s eye view.”
CEO – Deliver Media
Strategy #3: Embrace Consumer Data and Predictive Analytics.
It’s amazing to me how often we chat with a new brand who is doing everything right in collecting and storing their customer data but isn’t enriching that file with consumer data.
You can learn a ton about your customers by studying how they transact with your business. If you’re currently studying customer behavior at the individual level, kudos to you. You’re lightyears ahead of those that aren’t. What you don’t know is why those behaviors are occurring in the first place- what demographic or psychographic traits make individuals most likely to transact in a specific way. By appending these traits to each of your customers, you now have a holistic view of who they are, their socioeconomic status, the size of their household, likes, dislikes, and tendencies. This information allows you to further segment your customers to better understand with what types of consumers your brand resonates.
It’s true that this may take an internal data scientist or a vendor partner to fully digest, but they’re out there and more readily available than ever before. This new enriched data file can fuel predictive analytics, algorithms that predict the likeliness of each customer or prospect exhibiting a specific behavior. Want to know which customers you’re most likely to lose to a competitor? An Attrition Model can identify them. Is there an opportunity to revisit past customers for renewal or additional services? A Win-Back Model can prioritize them so you’re plucking the lowest-hanging fruit first. Do you have a specific segment of your business that you’d like to grow? A Behavioral Model can leverage past behavior to predict your ideal audience.
Since you’re clearly following this “how to”, you’re already aggregating data at the corporate level. You’ve launched holistic analysis for a deeper understanding of your business. And now you’re leveraging customer and consumer data to build out predictive models to attack those specific opportunities you identified. My company, Deliver Media, builds proprietary data warehouses for brands in the franchise space. Many times we start from scratch with the aggregation and standardization of the customer data and work our way through this process. It’s refreshing when we encounter a brand, like Domino’s Pizza and Home Instead, that have an elite-level grasp on customer behavior and the goals they’d like to achieve. For those familiar with football, it’s like starting our drive in the red zone. The more information you have to point a marketing partner in the right direction, the higher the probability that they will be successful and develop into a valuable resource for your brand.
Strategy #4: Closed Loop Attribution.
One of the best uses for a brand-specific data warehouse that houses customer data enriched with consumer data, along with predictive analytics determine campaign audiences, is to truly close the loop on Attribution.
Unlike some of the previous strategies, this is pretty simple (providing you’ve still been implementing each step as you read along). Your predictive models select the perfect list of individuals to campaign to based on the goal of the campaign. These campaign files can be saved in your data warehouse and compared to post-campaign transactional data to calculate true Return on Investment. You can see who you campaigned to (campaign file), which of those individuals transacted with the business (transactional data), how much they spent, what items/services they purchased, and whatever additional details you track in your POS or CRM. It’s now possible to quantify the exact benefit, within a predetermined window, of each campaign.
Let’s say your goal is to increase Customer Lifetime Value amongst your middle tier customers. You build a CLTV Model that selects those individuals most likely to increase their spend. You’ve allocated a $5,000 budget to target that audience over multiple marketing channels. Your model generates the audience file that you then disperse to channel-specific vendors and save in your data warehouse. All you have to do is start tracking the transactional behavior of those individuals after the campaign launches and until your predetermined window closes. Now you have the data to compare back to your marketing spend to calculate ROI. If you generated $25,000 in additional sales, you’ve got yourself a 500% ROI. More importantly, all of those marketing exposures were pointed directly at the specific business goal that you were trying to affect.
For complete clarity, you should really be pulling 110% of the audience you need, setting 10% aside as a Control Group, and then calculating Incremental ROI compared to the Control. This distills the data even further to account for transactions that you would likely have gotten anyways without the campaigns.
Strategy #5: Allow Franchisees to Access the Insights.
In many cases, franchisees are allowed to make their own local marketing decisions. Even when there is a corporate-approved list of vendors, franchisees often get to choose which vendors to use and what their local spend will be with each.
Sharing the insights gained from holistic analysis, as well as the same metrics for just their locations, adds perspective to these decisions. They can see how their locations are performing operationally compared to the system as a whole or a group of similar locations. You can also share how their marketing campaigns are performing compared to their peers to help them manage vendor relationships.
The more value your franchisees get from these initiatives, the more likely they are to maintain data integrity in each market. With access to brand-level resources, like predictive models to drive audiences and Closed Loop Attribution, your franchisees have a competitive advantage in each market.
If you’re thinking that this is a big project to take on, you’re right. Correctly navigating this entire process takes time and patience, but it pays big dividends in the form of better vendor relationships, elevated marketing performance, and laser-focused campaigns that align with your business goals.
Need some help? Deliver Media offers a Free Market Analysis to any business looking to implement a data-driven approach. Our team will provide the insight you need to either walk through the process in-house, or to partner with a vendor (like us) to be with you every step of the way. If you want to take the plunge, Let’s Talk!